Traditionally, businesses have deposited checks received from, for example, customers by physically taking them to a branch of their bank and depositing them over the counter with a teller or dropping them into a night deposit box. The actual physical presentation of checks to be deposited was necessary because, under prior banking laws, the depository bank had to present the original of each check to the corresponding paying bank in order to clear the check. This changed in October of 2004 with the enactment of The Check Clearing for the 21st Century Act, commonly referred to Check 21. Check 21 removed the legal requirement that an original paper check had to be presented to obtain payment. Instead, banks can now use digital images to transport check data from the bank of first deposit to the paying bank. If the paying bank cannot process a check image, the image can be printed, according to certain specifications, to create what is known as a substitute check (or IRD image replacement document), which is the legal equivalent of the original paper check. Check 21 has thus opened the door for remote check deposit solutions wherein check images, sometimes referred to as truncated checks, rather than original paper checks, are used to make deposits, thereby enabling businesses to eliminate trips to the bank. In addition, the use of check images also reduces check transportation costs among banks and improves funds availability.
As is known, a number of operations are performed on a check as it moves through the check processing/clearing system from the time it is first presented for deposit to the time it reaches the bank on which it is drawn. For example, in order for the check to be cleared and paid, it is endorsed one or more times between the time that it is deposited and the time it reaches the bank on which it is drawn. It is desirable for the various parties involved in the processing/clearing of checks to be able to audit the movement of the checks through the processing/clearing system. Traditional, paper checks, as a result of their passing through various financial institutions, are provided with information during the clearing process that is particularly suited for and that enables the auditing of the entire check clearing process. Specifically, paper checks are, as a general rule, physically endorsed during the clearing process. This is typically done by hand signing and/or stamping/imprinting the reverse side of the check with certain information that may later be utilized for an audit or other investigative purposes. The information provided by physical endorsement is physically bonded to the substrate (paper check), thereby providing a linkage between the physical check and the information that may be used as evidence for audit, investigative or dispute resolution purposes. As check 21 is expected to greatly increase the use of electronic check images in the check processing/clearing system, it would be advantageous to be able to replicate this functionality (i.e., the audit, investigative and dispute resolution functionality delivered through physical endorsement) in the environment where check images, rather than paper checks, are used for check processing/clearing.